Commission: Plain tobacco packaging does not damage the economy

A generic plain packaged cigarette pack is displayed during a press conference at Parliament House in Canberra. Australia, 2012. [Lukas Coch/EPA]

A European Commission spokesperson has told EURACTIV.com that any loss in the tobacco industry’s turnover arising from health warnings or plain packaging should be offset against the cost of treating people with smoking-related diseases.

The revised EU Tobacco Products Directive came into force in May 2016 and introduced stricter measures on packaging. For example, 65% of a packet’s surface should include health warning pictures and text.

Member states are also free to take additional measures, such as enforcing the use of plain packaging. France, Hungary, Ireland, Slovenia and the UK are among the countries that have already adopted this measure.

For the World Health Organisation and public health NGOs, plain packaging is an ideal tool to reduce the appeal of smoking. On the other hand, the tobacco industry claims it amounts to a “brand ban”.

Ben Townsend, vice-president for Europe at Japan Tobacco International (JTI), recently told EURACTIV that the ban simply doesn’t work.

“In Australia, the first country to introduce plain packaging more than four years ago, government data showed that the decline in smoking has actually stalled,” he said.

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The trend towards imposing plain packaging on tobacco products has made industry executives furious and denounce “Brussels-led overregulation” that effectively leads to “brand theft”.

Threats against Dublin

When the British government introduced plain packaging, the tobacco industry attempted to block it by invoking intellectual property rights. But it lost the court case.

In Ireland, press reports referred to industry “threats” about the country’s economy.

Dublin decided that all tobacco products manufactured for sale in Ireland from 30 September 2017 must be marketed in standardised retail packaging.

UK first EU country to adopt plain packaging for cigarettes

Britain will become the first Member State to introduce plain packaging on cigarette packets after members of the House of Lords rubber-stamped a new law on Monday (17 March).

Ireland’s Ministry of Health told EURACTIV in a written statement that a wash-through period would be allowed, meaning any products manufactured and placed on the market before the September cutoff date will be permitted to stay on the market for a 12-month period (i.e. until 30th September 2018).

According to the ministry, the aim of standardised packaging is to make all tobacco packets look “less attractive to consumers, to make health warnings more prominent and to prevent packaging from misleading consumers about the harmful effects of tobacco”.

But the Irish Independent reported earlier this month that the three tobacco giants (British American Tobacco, Imperial Tobacco Group and JT International) had threatened to undermine the Irish and EU economy in response to the measure.

The three companies sent a letter to former European Commissioner for Economic and Monetary Affairs and the Euro Olli Rehn warning him about the catastrophic implications of plain packaging.

In the letter, according to the Irish newspaper, the tobacco firms indicated they would seek compensation for damages which could “undermine savings […] and negatively impact the Irish economy”.

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European Commission: There is no loss

Contacted by EURACTIV, the European Commission confirmed that the directive allows states to introduce further measures relating to plain packaging where they are justified on public health grounds, are proportionate and do not lead to hidden barriers to trade between member states.

But the executive does not support the argument that plain packaging comes at a financial “cost” to the European economy.

“Any loss in the industry’s revenues or a country’s tax revenues from tobacco products arising from e.g. health warnings or plain packaging should be counterbalanced against the cost to the economy of treating people with smoking-related diseases,” a Commission spokesperson said.

The EU official pointed out that healthcare to treat people with smoking-related diseases costs €25.3 billion every year in the EU and an additional €8.3bn is lost to absenteeism/premature retirement.

“This is a total cost of €33.6bn a year,” the spokesperson emphasised, adding that a 2% reduction in smoking alone would translate into annual healthcare savings of approximately €506 million for the EU.